SAB’s new R5.4bn empowerment scheme to list on the JSE

As its R14bn forerunner winds down.
Zoleka Lisa, SAB Vice President of Corporate Affairs South Africa, blows the horn at the JSE. Image: Moneyweb

AB InBev’s South African Breweries (SAB) unit plans to list its new R5.4 billion broad-based black economic empowerment (B-BBEE) ownership scheme, dubbed SAB Zenzele Kabili, on the JSE on April 15.

The move, which will also see black retail investors now being able to secure shares in the beer giant, was announced by Richard Rivett-Carnac – SAB and AB InBev Africa mergers, acquisitions and treasury director – at an event at the JSE in Sandton on Monday.

It comes as the landmark SAB Zenzele B-BBEE scheme is set to wind down in April, having been launched 10 years ago under the old SABMiller stable. SAB, which is now part of the world’s largest brewing group AB InBev, forecasts that the original scheme will have generated almost R14 billion in value for South Africa upon its unwinding.

Read: Job cuts expected at SAB

“SAB Zenzele has disbursed some R4 billion to shareholders since its inception in 2010, with an additional R9.6-billion to be paid out when it winds up in April,” says Rivett-Carnac.

“This makes it the biggest B-BBEE payout in the history of SA’s FMCG sector.”

Listen to Nompu Siziba’s interview with Rivett-Carnac:

He adds that he is looking forward to the next chapter with SAB Zenzele Kabili.

“We are excited to offer SAB Zenzele shareholders the opportunity to partner and invest in SAB Zenzele Kabili and build on the strengths of SAB Zenzele, empowering qualifying shareholders even further as we enter the new decade.”

The initial SAB Zenzele deal transferred around 8.45% of ownership of SAB shares to more than 40 000 shareholders, including 29 000 retail shareholders from previously disadvantage communities, 13 000 current and former SAB employees, and the SAB Foundation. However, the scheme was privately held.

Rivett-Carnac told Moneyweb that while the original B-BBEE scheme was ground-breaking and delivered meaningful wealth and empowerment to thousands of South Africans, there were “learnings” that have been considered in launching the new Zenzele Kabili plan.

Read: AB InBev turns to solar power amid SA blackouts

“One of the areas was around liquidity of the shares, with shareholders having to hold on to [their shares] for 10 years as part of a privately held scheme.

“With our new scheme, having it listed on the JSE’s BEE segment means that it will be a lot more liquid. It also means that black retail investors and empowered groups can buy into SAB and effectively AB InBev as a global player,” he says.

Accessible at around R40 a share

Rivett-Carnac notes that the target price for Zenzele Kabili shares on the JSE will be around R40 a share, which will make them accessible, considering that the global AB InBev group’s share price is trading on the JSE at around R1 100 a share.

“The opportunity to own AB InBev shares through SAB Zenzele Kabili means these shareholders will participate and benefit from the growth of our global business. However, there will also be enhanced liquidity and transparency of pricing for shareholders as part of the scheme.”

Another change is that the new scheme will be based on “the principle of equal allocation” to employees, no matter what level they are at, he says. All employees will be part of the Employee Share Ownership Plan (Esop) aspect of the scheme.

SAB says the Zenzele Kabili transaction will be funded through a combination of:

  •  R678 million equity contribution from existing SAB Zenzele shareholders;
  • R600 million equity contribution from a new broad-based Esop funded by SAB;
  • R344 million reinvestment by the SAB Foundation;
  • R811 million of AB InBev discounted shares from SAB; and
  • R2 973 million of 10-year preference share vendor funding from SAB.

“SAB is committed to contributing to long term economic growth and development in South Africa,” says Andrew Murray, an AB InBev executive who was appointed vice president of finance at SAB following the merger in 2016. 

He says that with empowerment and ownership being “key imperatives and core beliefs” of SAB, it intends to list the new scheme on the JSE on April 15.

Jane Makhanya, owner of Getty’s Tavern in Tembisa and one of the more than 29 000 existing SAB Zenzele retailer shareholders, says she is proud that her family-run tavern of 30 years was part of the original SAB BEE initiative.

“We invested at the start and have benefitted from dividends over the years. I am looking forward to the payout in April, however, I want to re-invest in the new SAB Zenzele Kabili scheme. I am really thankful for SAB to have given us this great opportunity.”

 

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Hooray for a non-racial South Africa.

All these fancy schemes – thought out by clever lawyers and accountants and advisors at huge expense – rather just give the people who qualify by colour of skin the money in cash installments. They are, after all, as with land claims, not interested in owning anything other than cash.

I’m so glad apartheid ended in 1994.

BEE is simply another version of Apartheid : This country just cannot learn from its mistakes !

let’s see how this works out for SAB. I can already hear the stampede to buy these new Beeeeee shares. But not for me thanks. Sorry about that.

A donation to Eskom to pay for the ‘1llegal connections’ would be nice too. Siphon the money out of this Company too.

Their share price is so sh-t that they are now giving shares away for virtually nothing bwahahaaaa

More cash circulating in the economy is always a good thing!

The shareholders need not wait for the discounted BEE deal in April. They can buy at a 50% discount to 2016 price right now on the normal JSE.

Imagine that you are fund manager sitting in London or New York reading this. All what has happened is that the company has donated shareholder value . Then you look at competing companies which do not have these BEE requirements in different jurisdictions and then decide which one to buy.

The share may be cheap-its lost so much value in the last couple of years largely due to gross over-gearing but would that be enough to buy this.

Fund managers are avoiding toxic South Africa and the market is being punished-look at the Naspers discount-colossal-and growing despite Prosus-why-South Africa smell test failed!

100%…

SAB says the Zenzele Kabili transaction will be funded through a combination of:

R678 million equity contribution from existing SAB Zenzele shareholders;
R600 million equity contribution from a new broad-based Esop funded by SAB;
R344 million reinvestment by the SAB Foundation;
R811 million of AB InBev discounted shares from SAB; and
R2 973 million of 10-year preference share vendor funding from SAB.

Incorrect. It will be funded 100% by the current shareholders

Besides being a company that has perfected anti-competitive behaviour since the 1960’s, while making substandard beer and doing hardly anything for BBBEE – but telling everyone how it should be done, this is another reason to buy Windhoek..!

When will people realise that SAB is the chief culprit for much of social woes; feeding off peoples weakness.

Some areas:
– Domestic Violence,
– Motor car accidents.

Most recently adverts are targeting women. Fooi tog.

Sure,

Yet moderate intake of alcohol does in fact lead to increased life expectancy.

Beer stats from large studies are especially interesting, spirits was not so good.

Smoking on the other hand I yet have to see any benefit, except for business.

“the principal of equal allocation”to all employees …..(of all race ?)

SAB serves as a cheap catalytic converter for the majority of citizens. SAB converts money into urine, with a headache as a by-product. Now they made their clients partners in their business. The BEE partners are borrowing money to buy a stake in a venture that turns their money into urine. So tell me- who is actually empowered here?

Corporate South Africa really needs to wake up and smell the coffee. R100 invested here in 2010 will reap a handsome R76000 come end of MARCH for the many shebeen kings and queens that participated in this share scheme. I myself as a colored person was prevented from partaking in this deal because it was only open for retailers. What about the millions of folks(black, colored, white) who support this company and yet don’t get to benefit out of the growth of companies whose products and services they consume. I seriously wonder will SARS get a fair share out of this increase in wealth that these kings and queens have enjoyed. Mind you, I’m no longer buying SAB products. Let’s boycott this behavior.

End of comments.

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